Management Buy Out

MBO’s often arise in situations where either a family-owned business faces a generation change without any natural succession or a group of companies wishes to sell a non-core trading division or subsidiary.

The MBO offers the existing management, who are responsible for the day to day decision making, the opportunity to acquire the business and reap the rewards of business ownership. Sometimes, a business owner seeking to sell their business will suggest that the existing management team takes the business on, as a way of protecting the long term viability of the business as well as rewarding the existing management for their efforts to date and giving the owner some comfort as to the future running of the business. This form of MBO has come to be known as a VIMBO (or “Vendor Initiated Management Buy-Out”).

When dealing with MBO’s/MBI’s, our advice to management teams usually comprises the following stages:

  • establishing the feasibility of the transaction by reviewing the relevant financial and commercial information
  • determining a suitable funding structure and assisting with the production of a funding document for submission to potential funders on behalf of the management team
  • proposing an appropriate deal structure and assisting the management team negotiate headline terms with the vendor(s)
  • leading discussions with potential funders, reviewing proposed finance terms and assisting in the choice of preferred funder
  • and project managing the transaction through to completion

Sunaxis also have extensive experience of advising vendors on the sale of their businesses or companies to both current and incoming management teams alike.